Licensing basics

Intellectual property

People tend to think of software as a commodity—something you buy off the shelf from a retailer, like a computer or a television. When you buy a commodity, you own the physical object, and all or most of the commodity’s value is intrinsic to that object. However, when you acquire software, its value comes not from an object (such as the disk it is stored on) but from the knowledge of the programmers who wrote the software. You do not own that knowledge; you are merely acquiring a limited right to use it. In other words, software is an intellectual property, much like books or music. When you buy a book, you own the ink and the paper, but not the words and thoughts of the author. The same holds true for music, software, and all other intellectual properties.

Intellectual property includes ideas and creative expressions that have commercial value. By definition, these items are intangible and not easily defined or identified by their physical parameters. Hence, they are copyrighted. A copyright is an intellectual property right (IPR) and is protected by international copyright laws. Intellectual property rights include copyrights, trademarks, and patents. These enable the owners of the intellectual property to decide who may access and use their property, and to protect that intellectual property from unauthorized use.

What is a license?

A software license provides the legal right to install, use, access, display, run, or otherwise interact with a software program. A license does not necessarily include the rights to media, manuals, or support. The way in which the software can be used is determined by the license agreement. Consumers must agree to the terms of the license agreement, when they use the software. License compliance protects a software developer’s investment in its intellectual property. For consumers, the benefits of compliance outweigh the disadvantages. With proper compliance, consumers are sure that the software they are using is covered by the terms of the license—protecting them from incomplete, pirated, corrupted, or malfunctioning software. In addition, they have the option of receiving technical services and support to maximize their investment. This is called software asset management (SAM).

License life span

Licenses can have different life spans. They can be either perpetual or nonperpetual:

Perpetual licenses are everlasting and valid if the software is being used in accordance with the license-agreement requirements.

Nonperpetual licenses, or subscription licenses, are temporary and provide the right to use a particular licensed product until the end of the license-agreement term.

What is a license agreement?

The license agreement defines the way in which software can be used. It determines whether the software can be installed on more than one PC or device. It outlines downgrade rights, if any, and states whether the license is perpetual. When consumers acquire and install new software, they must accept the license agreement to legally use that software. To meet consumer needs, it is important to understand the content of license agreements and the differences between specific licensing programs:

Software license terms govern single software titles acquired by an individual and software acquired with a PC from an OEM. They generally grant the right to install one copy of the software on one PC and generally do not grant downgrade rights.

The Product Use Rights (PUR) document serves as an appendix to a Microsoft Volume Licensing program agreement. It details specific use rights for all software contained in a Volume Licensing program, and provides the use rights for software when a customer acquires a specific license. It includes the right for primary users of an application to install a second copy on a portable device for their exclusive use. The PUR includes additional use rights for all software acquired through Volume Licensing programs, including downgrade rights (or the right to install a previous version), re-imaging rights, and cross-language rights (the ability to use other languages in place of the original language ordered).